< p>Europe needs bigger and stronger banks that can compete with credit institutions in the US and China. This was stated by the President of the European Central Bank, Christine Lagarde, during a hearing before the European Parliament's Committee on Economic and Monetary Affairs, reported Reuters and France Press, quoted by BTA.
Lagarde's statement followed reports of talks about the possible merger of the German bank "Commerzbank" (Commerzbank) and the Italian "UniCredit" (UniCredit). The Italian lender recently increased its stake in "Comertzbank" to more than 21 percent, announcing plans to continue buying shares until the stake reaches 29.9 percent. However, the eventual merger met with resistance from both the German bank and the majority of politicians in Berlin.
According to Lagarde, consolidation is in the best interest of Europe and the private sector should decide whether to proceed with such deals.
"Cross-border mergers – banks that can actually compete in scale, depth and scope with other institutions around the world, including US and Chinese banks – I think they are desirable," Lagarde told the EP committee, adding that her comments should not be taken as direct interference in a specific deal.
Mergers carry certain risks, but the private sector must decide whether the deal makes sense, she added.
"Cross-border mergers, if they create larger institutions that are more flexible and have greater scale and greater depth, have many benefits," Lagarde said.
This is not without potential risks, but, of course, entrepreneurs in the private sector must evaluate all this and determine whether it makes sense (from such deals – note) or not, she further explained.< /p>
On inflation, Lagarde said the European Central Bank is increasingly confident that inflation will fall to the 2 percent target and this should be reflected in the upcoming October interest rate decision.
The ECB has already cut interest rates for the first time in June, as well as once more earlier this month.
"The latest data reinforces our confidence that inflation will return to target in due course," which will be taken into account at the ECB's monetary policy meeting in October, Lagarde said.
She also addressed a series of weak data on economic growth in the eurozone, describing it as "facing headwinds".
Still, Lagarde said the recovery is expected to strengthen and rising real incomes will allow households to consume more.
She said the labor market, the source of some price pressures from rapid wage growth, remains resilient even if wage growth slows and corporate profits absorb some of the wage increases.